The Agricultural Bank of China (ABC) said yesterday it is expected to complete a State-aided restructuring by the end of this year, and will later strive to list the whole bank in the stock market instead of a rumored partial listing.

 

"It should be completed before the full opening up as required by World Trade Organization commitments," said Han Zhongqi, vice-president of the State-owned lender. Han mentioned the end of this year, when China is scheduled to grant foreign banks full access to the local market.

 

China's second-largest commercial bank by assets is still awaiting regulatory approval for a bailout scheme. Its three peers of the "big four" State-owned banks - the Bank of China (BOC), China Construction Bank (CCB) and Industrial and Commercial Bank of China (ICBC) - received a combined US$60 billion in capital injections from the Chinese Government over the past two years.

 

Although ABC is viewed as the weakest of the four, Han said restructuring his bank would not be significantly costlier than rescuing the other three.

 

This excludes the 50 billion yuan (US$6.1 billion) of losses imposed on the bank due to earlier financial reforms.

 

"Taking that (the losses) out, the cost of reform for the Agricultural Bank of China will not be far from that for the Industrial and Commercial Bank of China," Han said.

 

The ICBC received a US$15 billion capital infusion last April, but 270 billion yuan (US$33 billion) of non-performing loans were transferred from its books to asset management companies.

 

Han dismissed rumors that the bank aims to list only part of its assets in an initial public offering, that he insisted it would still be a few years away.

 

The buzz had already caused unrest at some of the bank branches, as employees feared they may be left out in the State bailout program.

 

Although the cost of a one-off reform will likely be large, listing parts of the bank may leave problems with some branches unsolved.

 

"That risk might grow, and the eventual cost might be even bigger," he said.

 

Restructuring the ABC bank is widely seen as the most complex of the "big four" banks. The ABC has the most cumbersome distribution network among all banks in China. It still has 31,000 banking outlets nationwide, more than double what the CCB owns, even after dismantling more than 20,000 outlets in the past few years.

 

The official said about 480,000 staff members are on the bank's payroll, which exceeds the ICBC's staff, the largest bank by assets, by 100,000 people.

 

ABC's stake in China's rural areas is another reason the bank is the last to start joint-stock restructuring. It is considered a part of a rural finance reform that the State is still pondering.

 

After years of being a major lender to Chinese farmers, the bank still has 39 percent of its loans in agriculture-related sectors, and 61 percent of outlets in counties and the countryside.

 

But internal reforms have been going on in the past few years, ranging from management and technology to personnel training and credit culture innovation, Han said.

 

(China Daily January 18, 2006)